"Wall Street Speak" for "Rate Cuts are Coming..."Futures tick up as markets look for the bright side of a government shutdown...
Good morning: We awaken to the new thunder of optimism in the stock market, driven by the government shutdown… the idea that shutting down the government will “cement” future interest rate cuts as the Federal Reserve grapples with the shutdown's impact on spending. Let’s explain how this circus goes… The Fed prints the money… the government spends the money… and when the government's share of all this spending (which is now at war levels) abates temporarily… the Federal Reserve needs to cut interest rates… Interest rates… by the way… that are antiquated and aren’t actually used anymore by banks. This is why there is increasing pressure to link the system to the Secured Overnight Financing Rate (SOFR)… The U.S. economy feels like a game of Whose Line Is It Anyway?
The math is made up,and the points don’t matter… That’s the first problem… The second problem is the people who actually respond to these markets and make predictions. The average person has no clue what the hell they are actually saying… I was reading an article this morning stating that Federal Reserve Chairman Jerome Powell and his team will now “err on the side of caution” and continue to slash rates. This was the quote from Evercore ISI…
Guha uses +75 words to say: “The Fed will cut rates in October because they won’t get jobs data.” For those brave, confused souls, here’s the translation guide…
When you charge institutions $500,000/year for research, you can’t write “Fed will cut because no data.” You need something that goes nudge what we judged was already a firmly odds-on further odds-on. It’s the same reason consultants turn “fire people” into “right-size the organization through strategic human capital reallocation.” I read this stuff so that you don’t have to… I’m just asking that one day they at least make it entertaining and say something like:
Let’s get to the market analysis for this morning… Continue reading this post for free in the Substack app
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